Recovery losing steam | Pre-crisis levels within reach by yearend 20/09/2021
quarter, domestic orders expanded 5.8 percent compared to the previous quarter. Orders from abroad rose much less, going up 1.6 percent. Demand from within the euro area picked up 4.3 percent, while orders from third countries dipped by a minimal 0.1 percent. Compared to pre-crisis levels, demand from within Germany and from third countries was up by more than 13 percent in both cases. Demand from the euro area was only 1.3 percent higher than before the crisis. Among the main groups of industrial goods, incoming orders for intermediates were up by a slight 0.3 percent in the second quarter 2021 compared to the previous quarter. While orders from at home increased marginally, orders from abroad stagnated. Despite momentum tailing off slightly, orders were nonetheless up by a clear 15 percent on pre-crisis levels (fourth quarter 2019). Capital goods producers received 5.2 percent more orders in the second than in the first quarter 2021, fuelled primarily by a major increase in domestic orders of 10.6 percent. Foreign demand for capital goods only increased by 2.2 percent in the same period. Compared to pre-crisis levels, orders were up 11.2 percent. Orders for consumer goods increased by 3.8 percent quarter on quarter in the second quarter 2021. Domestic orders, going up 5.7 percent, comfortably outperformed orders from abroad which rose 2.6 percent. New orders for consumer goods in the second quarter were not only 6.1 percent higher than pre-crisis levels but also set a new all-time record. On account of supply shortages for specific intermediates, manufacturers are not presently able to work through the high volume of orders and their order books are swelling. According to figures from the ifo Institute, the reach of orders in hand in manufacturing climbed to a new record high of 3.7 production months at the beginning of the third quarter 2021. Among the main industrial groups, orders in hand among consumer goods producers rose by a clear 0.7 months to reach 2.7 production months. Among the producers of intermediates, the backlog of orders dropped off slightly to three months. Producers of capital goods needed 4.2 months to complete their orders in hand. According to figures from the German Federal Statistical Office, the backlog of orders in manufacturing in June 2021 was up by 2.8 percent on the previous month. With this increase, orders in hand reached their highest level since this data series began in January 2015. Domestic orders in hand increased by four percent while orders in hand from abroad rose 2.2 percent. Industrial production: recovery constrained by supply bottlenecks In July 2021, industrial production (manufacturing excluding energy an d construction) increased by 1.3 percent compared to the previous month and following seasonal and calendar adjustment. Figures for June were revised upwards slightly to one percent down on May (previously: minus 1.3 percent). Compared to the same month last year, production increased 6.4 percent. Compared to February 2020, the last month before restrictions were imposed to stop the spread of the pandemic, production was 6.3 percent lower following seasonal and calendar adjustment. Energy production dropped for the third consecutive month in July, this time by 3.2 percent. Activity in the construction sector, on the other hand, expanded by 1.1 percent compared to the previous month. In manufacturing overall, production increased by one percent in July 2021.
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